Lean Thinking

The aim of the Toyota brand is based on the basic principles that arise from the questions such as how can we create a car brand, that can be offered to the market, as cost-effective as possible, payable and where mistakes will be minimal. The aim is to answer the question of what the customer demands when we bring this vehicle to the customer. It starts with the customer, what does the market demand, what are the expectations in the market? The expectations in the market are changing, then our band should not be static in our production line. It should be made flexible enough to keep up with change.

If the aim is to bring a drivable automobile to the market that will meet the expectations of the market, a system that emerged with the idea of ​​providing every process accordingly should be based on a simple thought. Lean thinking emerged from here on the production side of the Toyota automobile factory. Lean thinking can also be applied in the service company, in corporate management. There is no need for production, trade may be done. Lean production, independent of human resources, accounting, marketing, sales, senior management, and sectors, is applied with a lean mind.

Lean thinking consists of five basic principles. The most important point of lean thinking is value. So what is the point where value is generated in a company? When we look at it, the main purpose of companies is to make money and at this point, there is a place where they log into the system. The works and outputs of the company in the system are realized. In the manufacturing company, the input can be raw material.

For example, in an automobile company, the manufacturer processes the inputs inside and the cars are produced as output. In order for companies to earn money, the cost of input plus the cost incurred on the side we deal with inside is added up. At the end of the day, the output is sold to the customer as an automobile, and money is earned in return. As a result, the amount received from the car sold must be higher than the cost so that a profit is obtained.

Value: Value is the point to see more benefits in themselves for the price that potential buyers pay in the market. It is necessary to create value as a company. The customer pays for the product or service and wants to get more value than the price he pays.

For example; while the customer pays a hundred thousand TL for a car, he expects it to provide an advantage of two hundred thousand TL in return. If he does not think he will provide this, the customer does not pay that price. The car cannot be sold in value in the market and has to lower the price. Since the production cost and input costs are the same in value thinking, the product may not find a place in the market.

Value for Lean Thinking is determined by the customer. Lean thinking focuses on value, it creates value as a producer.

To explain with an example; For a company engaged in iron and steel trade, it is necessary to take it from the mine and convert it into raw materials, semi-finished products. Since the profit is very low here, the volume must be high so that it can be earned from the release. Ore is mined from the mine, there is the miner's profit.

A value must be added to the extracted cost so that the miner makes a profit. Later, let's assume that large iron and steel factories turn it into usable semi-finished products, add something on it, and again process the raw material from the mine and turn it into an ingot with usable semi-finished products.

Continuing the example, let's say a company producing aluminum ingots collects aluminum from different places and then melts it into ingots. Actually raw material but processed, puts profit on it, creates value there. The raw material is mixed here, but extracting is worthwhile. That value has a counterpart, which makes up the company's profit. If the car company takes that ingot and uses it as an automotive part, it creates value there.

Value is the structures that start from the extraction of ore and are added on top of it with the intermediary and value-generating structures. Here, as the value increases, the price increases. Ultimately, if the main purpose is public driving, then it is the customer in the market that attracts this system and determines the essential value.

This entire supply chain reveals the values ​​of companies in between. Here, the cost of the product continues to increase. When we focus on value, there is a value in converting the raw material to bullion, but it's really not much. Buying and processing the ingot and using it as an automobile is more valuable.

 

When we focus on this value, it is necessary to reveal it as quickly as possible, efficiently, and without waste. Lean thinking's first principle is primarily "Value".

 Value is followed by the flow of value. I gave you an example of the industry, from the main input of this company until it is sold to the end customer, value is again produced at the points. Therefore, there is a value generation and flow at every stage.

 

Value Stream

The second basic principle of lean thinking is value flow. The value stream includes all stages from the input of the raw material in the company to the final product until it reaches the end-user. Each stage has a value generation and value stream. It is necessary to focus on the value stream and operations. In these streams and operations, no value is generated should be eliminated.

If there is an operation with no value in between, there would be loss and waste. Waste should be eliminated or reduced as much as possible. Because as the value in the value stream goes up, losses occur.

For example, when the company is established close to the raw material, there is a loss from the extraction of the raw material to it's arrival at the factory. There is no value there, but it must be delivered. The more that waste is prevented, the more minimized the loss of value. If there is a distance between the raw material producing company and the factory, it means there is a process that does not create value.

The process should be reduced as much as possible. If the factory is built close to the raw material, we will minimize the loss of value. The value stream is the part of the process from the raw material producer to the main factory at that point. Losses occur when focusing on the value stream.

 

Continuous Flow

The third basic principle of lean thinking is the continuous flow system. In fact, it would be more correct to call the third principle a pull system. A pull system is the intention of pulling starts with the demand of the market. We cannot say that any value is created in today's industries when something is done that the market does not demand. Therefore, attracting the market is an important principle.

Value flow is provided by the market's attraction, demand, and the initiation of the process in response to demand. As a result, the process begins to recede from the farthest point with the demand of the market.

To give an example; the product in demand is the automobile because people need to go from place to place quickly and freely. It pays the companies that will provide this and the company meets the demand from the determined cost in response to this demand. The customer is here and the company that will meet the demand is here, the customer can give this money, I think when he says it is worth it, the company meets the desired product or service in return. As soon as the customer is satisfied and says they need a second car, the company produces it again.

In this way, there is a so-called continuous flow. At this point, against the continuous flow, more precisely, the drawing system provides this continuous flow.

Continuous Pull

The fourth basic principle of lean thinking is the continuous pull system. What is meant by pulling is that it is constantly pulling on the side whose value reaches the customer's final need. This is like drawing water from a well, so it should come as you draw it. If a company tries to sell a product or service that the customer does not want, there will be serious productivity losses. It is affordable, but not sustainable. It will not attract customers and will have to bear very serious marketing costs.

You should not try to sell people what they do not want, there may be companies that do this from time to time. At this point, they can be successful, but they cannot provide short-term and sustainable success. In response to customer demand, it will attract the customer and will be produced as such. Ideally, it should "pull", not "push". The pull principle starts with the demand of the end customer. It means that no product or service is produced in any way without asking the customer.

 

Perfection

The fifth basic principle is that all these processes should be free from waste as much as possible and perfect. This is also called operational excellence. Operations are generally thought of as the flow of the process is as lossless as possible.

Therefore, according to these five basic principles, a company carries out either it's management or the processes of its departments with a simple thinking system. In the company, the accounting department, human resources, sales department, or the board of directors can work in this way, they do not necessarily have to produce.

Lean transformation is an important methodology that is also used in management consulting projects. If we consider this issue with two examples as a production and service company, let's consider a manufacturing company that produces auto parts, at this point, let's assume that a large company has a procurement project. Each term this company goes through various orders. Suppose the firm sends the parts to its customer.

Because the work to be done is certain, the mold is certain, the printing is done as a result of the mold, the main production takes place with printing and provides the parts to the customer. Suppose you do this before the order arrives, the order will come anyway, let's press it because production is available, production has no job, a certain expense is incurred for the workers or the company. Instead of making this expense, let's produce this now, the order has not been received, but let's still produce it.

Visitors from outside will see that the company may think that it is working very well. As a matter of fact, the company that will make that order passed five hundred thousand pieces, not one million pieces. Let's assume that the manufacturer prints for a million. He printed the products but it is not clear when the order will arrive, so it produces and will remain in stock. Within the stockpile, financing was used to buy the raw material, labor was spent, space was kept in the warehouse for storage. If there is a fire in the separate warehouse, the risks of the storage area are also the costs of stopping in the warehouse. In this way, the operation is not the pull system, but the push system.

Production is done without attracting customers. The customer orders five hundred thousand pieces from the company. When the company says I have a million pieces, the customer does not need it that much, then there may be requests such as make a discount. This is one of the possibilities that occur in a company where lean production is not available. Another possibility is intermediate stocks, one station of the operation produces and transfers to the other side, if two people work less on the other side, semi-finished products accumulate in between. When you enter a company, the accumulation of semi-finished products between operations also means that lean management is not done here.

Let's give an example to the service company. Let's say you're a tourism company and working on a new service. Suppose the tourism company has thoughts of bringing tourists from abroad. Let us assume that without sensing the demand in the market, receiving data, creating service, creating catalogs, making beautiful packages, printing catalogs, working with advertising companies, and creating these stages. At the end of the day, when they see that there is no such demand, it is not realized, it is understood that the work done is actually a cost, time, effort, and waste.

In this sense, this work also serves the stock. If a move is made without demand, here again, inefficiency and push are required. Or let's say a traditional room was prepared for tourists, suitable for their culture. As a matter of fact, since they have to push this too, it becomes a reason to compromise in the market. Because it is in stock, it does not see it as a cost, whatever we do is a profit. Therefore, this is also an understanding that should not be. It is one of the risks that a service company that does not act with lean thinking may face.

In this context, the most important point is that the market attracts the customer system. When the market draws, it is necessary to set up the operation so that the flow of the business is ready in general. Otherwise, it should not mean that we should be caught off guard when there is such an opportunity in the market.

On the contrary, if we are a production company, flexible production systems should be established. A service company, on the other hand, should be prepared for flexible service development mechanisms and departments. So to speak, when the wave comes, it should be caught ready. Lean thinking has to be prepared for these, even with certain minimum stocks.

There are also losses in companies that implement the lean thinking system. Because it is not possible theoretically that there is no 100% loss, there is no 100% perfect system, there will be losses, but a system that can minimize this and respond as flexible and agile as possible should be established. The same is true for the manufacturing company, service company, or departments. It should be as flexible as possible against extreme decreases in demand so that the continuous flow is not disturbed.

When the demand decreases, water should not be pumped too much, so to say, if the demand decreases, the flow rate of the water should also decrease. Because there is a certain demand from the flow rate of the water, overloading people will cause waste, instead, it should be made regular. When the demand increases too much, when there is a flexible production or service company, it is necessary to establish a flexible structure to meet the demand. 

The systems should be as flexible as possible against the future increase and decrease in demand. Take the example of the heart pumping blood here. When night falls in our bodies, stagnation sets in, at which point the heart begins to pump blood accordingly. At this point he does not need much, he will sleep now. As the demand decreases, the heart slows down the blood flow accordingly. Therefore, human health continues smoothly up to the capillaries. If the heart cannot adjust this and tries to pump more blood, then it may cause palpitations or cardiovascular disease in the body.

The heart must fulfill the desired request. For example, in an emergency, the body reacts, adrenaline rises, demand rises and more blood is needed. When there is an emergency in our body, the heart adjusts the blood flow according to the demand. In response to demand, the heart activates the systems in the body to provide.

Therefore, we can think of companies like this. It is necessary to establish the appropriate system in a way that will slow down and increase the speed against the demands from the market with a lean understanding of thought. Continuous flow, just as in the cardiovascular systems, the demand to go to all capillaries should be fast, and the required blood should go up to the capillaries.

Likewise, when he is relaxed, he should pump less blood. There should be no extra stock, if the heart pumps more blood than necessary, it will get tired and feel unwell, unnecessary energy expenditure.

The value at this point, the value stream, the continuous pull system, the so-called operational excellence should be as perfect and indifferent as possible. For example, if there is bleeding somewhere, loss occurs there. Here, if the heart is pumping blood but is wasting, we can talk about an operational deficiency.

Let's think of the value of all this flow like blood, let's think of the flow of value as the flow of blood, and let's think of continuous flow as the vascular system. Shrinkage depends on the body's request, environmental conditions when something urgent happens in the market. Demand is increasing in the market then we need to be more agile, the heart has to pump more, the same is true within the company. Likewise, it should relax and be appropriate in quiet times. It should be perfect in this whole flow system, that is, it should not be in internal or external bleeding, as much as possible, this blood flow should go to the cells, it should come from the cells.

The lean thinking system is not a structure that can be said to be paid for, let them come and do it. The lean thinking system is the thinking system that the top managers and owners of the company should understand and establish the basic logic. Tutorials and various books can be read as a starting point. Sample; The Goal book, The Machine That Changed The World, can be started with these books.

It starts from a basic point, it can be an operation, accounting, human resources. There is a perception that the lean thinking system is applied only for production. Actually, lean thinking is also a guide in terms of evaluating time correctly in management. At the end of the day, what's meaningful has been done to make the company better, in a way that will pay off in the long run. What he did to systematically put on day to day and continue to build.

For example, suppose you have a company with a contract operation and a large number of contracts. The company may be experiencing uncritical wet-signature processes. So instead of this wet-signature process, what if we get approval in a digital environment?

When it is said, let's see it legally, it would be very good if it was a wet signature, but if he can say yes to 60-70% when he receives it on the internet and if he questions them and says let's do it the next day, this is a very serious value. Because the loss of the company due to contracts will be eliminated. These losses can create extra bottlenecks to firms where they are contracted or not.

In this sense, when the owner of the company says, let's focus on this and ensure efficiency here, this is an example of thinking from the bottom of the business in lean management. Why do we sign a job? If it is signed electronically, then the lean thinking system begins when he begins to question why we should not do it.

Otherwise, there is no need for a wet signature, if we say that stamp signature is indispensable and if our eyes are closed here then action cannot be started. Therefore, it should be said to managers and business owners that it is necessary to think and question the business from the bottom. In this context, companies can start applying lean thinking systems in their companies by getting lean transformation consultancy services.